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Cross-Border Tax Guide — International Income, Double Taxation, and Compliance in NZ

the cross-border tax rules in New Zealand. The guide covers the foreign income disclosure requirements, the double tax agreements (DTAs) and the treaty relief, the foreign tax credits, and the international tax compliance through the IRD.

Foreign Income and Double Tax Agreements

New Zealand taxes its residents on the worldwide income. The foreign income (the overseas salary, the foreign dividends, the rental income from the overseas properties) must be declared in the NZ tax return. The Double Tax Agreements (DTAs) with over 40 countries prevent the double taxation and provide the reduced withholding tax rates on the cross-border payments. The NZ-resident taxpayers may claim the foreign tax credits for the foreign tax paid on the assessable foreign income — the credit is limited to the NZ tax payable on that income. The transitional resident exemption provides the temporary relief from the taxation of the foreign income for the first 48 months of the NZ residence. See our Foreign Income Guide → and the Tax Treaties Guide → for the full details.

Compliance and Disclosure

The cross-border tax compliance includes: (a) the disclosure of the foreign assets and the income in the tax return, (b) the Foreign Account Tax Compliance Act (FATCA) reporting for the US-connected accounts, (c) the Common Reporting Standard (CRS) automatic exchange of the financial account information, and (d) the controlled foreign company (CFC) rules for the NZ-resident shareholders of the foreign companies. The penalties for the non-disclosure of the foreign income include the shortfall penalties and the interest. See our Non-Resident Tax Guide → for the non-resident obligations.